Retail and OEM keys are the same. They both unlock and allow you to use the full functionality of Windows. It's just a matter of how you acquired the key that designates it as OEM or retail.

In short, yes it will work.

Its the other way round.

The disks are identical. However the keys are different. OEM keys are tied to the motherboard they are used on, however retail keys are not, and can be used on another machine, only 1 at a time though.

It will install but activation will reject it.
That's because, in a file on the install disk, there is a preset value for the 'Channel' to which the licensing belongs.*
In a file calledei.cfg one of the entries is called 'Channel' and the value set for that variable on a retail install disk is set as 'OEM'.* For the Retail key to be accepted that variable needs to be set to 'Retail'.